Hedge Funds Bet on Aggressive ETFs

Leveraged Vehicles
Can Pay Off Big,
Or Cause Big Loss

Hedge funds are embracing an aggressive type of exchange-traded fund -- and that makes some of these hedge funds riskier than they may appear.

With lenders becoming ever-more tightfisted and hedge funds looking for low-cost ways to make big bets, more funds are buying up so-called leveraged ETFs, investments that promise two times the rise or fall of an index. Although ETFs generally are viewed as conservative vehicles, these ETFs can...